Lenders undercut the big four banks with new loan terms
In response to APRA easing its guidelines on loan serviceability, two non-major banks have changed their mortgage serviceability assessment terms.
Lenders assess loan serviceability based on whether a prospective borrower would be able to meet repayments up to a certain interest rate. New guidance from APRA now says that Australian lenders can decide their own interest rate floor, and so far, two of the majors have responded by lowering their benchmarks.
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Since then, second-tier lenders Macquarie Bank and Suncorp Bank have also moved to adjust their serviceability guidelines.
In an announcement this week, Macquarie Bank said it has reduced its interest rate floor from 7.25 per cent to 5.3 per cent and increased its buffer from 2.25 per cent to 2.5 per cent.
Suncorp Bank also told Smart Property Investment’s sister title Mortgage Business that it would be cutting its interest rate floor from 7.25 per cent to 5.5 per cent.
Further, Suncorp Bank will also increase its buffer from 2.25 per cent to 2.5 per cent.
In addition to ANZ and Westpac, which adjusted their rates last week, other lenders are expected to follow suit soon.
In fact, the Commonwealth Bank of Australia, NAB and AMP informed Mortgage Business that they’re currently in the process of reviewing their assessment rates.
